Financial Feasibility of Geothermal Project J-3 and J-4 in Indonesia

This study assesses the feasibility of the J-3 and J-4 geothermal projects using key financial indicators such as Internal Rate of Return (IRR), Net Present Value (NPV), Payback Period (PBP), and Profitability Index (PI). The research followed a structured process. It began with a literature review and used theories related to capital budgeting, valuation, and renewable energy finance to guide the study. The approach combined both qualitative and quantitative methods. However, the main focus was on quantitative analysis using financial records, contracts, and operational data. These inputs helped build a financial model to estimate the project’s cash flow over 30 years. The key assumptions used include electricity tariffs, capacity factors, capital costs, and operating expenses. The results show that the J-3 and J-4 projects are financially sound. The study highlights the need for strong control over construction costs, tariff arrangements, and plant performance. By combining detailed financial modeling with strategic analysis of stakeholders and the project environment, this research offers useful insights into risk and project management. These findings provide practical support for future geothermal energy investments.